The 230,000 nervous UK customers of Icesave will begin the complicated process of getting their money back this week when the Financial Services Compensation Scheme contacts them with details of the extraction process.

Around £4.5bn is owed to UK savers after the internet based bank's parent company Landsbanki collapsed in October, forcing the UK government to step in when it emerged that the Icelandic compensation scheme did not have the funds to refund customers.

Savers will receive the first of two emails this week from the FSCS. This informs them that the recovery process is beginning, and will be followed by a second email containing instructions on how depositors can log on to their existing Icesave accounts to complete an electronic process which will allow them to receive their compensation.

Transfers are expected to begin next week and savers will have a month to activate the online transfer of their marooned savings into an alternative bank account. Savers should see their money transferred to their nominated bank account within five working days using the BACS electronic transfer system. Loretta Minghella, Chief Executive of the FSCS, said: "We recognise that Icesave's customers have been anxious about their savings. We would like to thank them for their patience. The first payments are scheduled to start in the second week of November. We expect to offer compensation to the vast majority of retail depositors in November." Customers of UK based savings products should receive all their money back as the standard guarantee of £50,000 has temporarily been waived due to "exceptional global circumstances".

However UK citizens living overseas, including around 2,000 based in the Channel Islands and Isle of Man, who saved into Landsbanki's offshore operations are not covered by the UK government's bailout arrangements and will receive no compensation from the FSCS. Landsbanki Guernsey customers have been informed by administrators that they should expect to receive just 30p for every pound they have lost.

Any UK Icesave customers who do not receive their first email from FSCS by close of business on Friday should contact FSCS on 0845 7300 131.